Gordon Brown warns Scots independence means losing British state pension

Gordon Brown has warned his fellow Scots that a vote for independence would mean them losing their British state pension.

The former Prime Minister said leaving the UK would mean "the British pension stops, the national insurance fund that you're paying into is broken up. "

He said he did not believe the SNP administration's assertions that pensions would continue to be paid, pointing to questions over the value of North Sea oil revenues in the coming years.

In a keynote speech in Fife, Mr Brown also said pensions were the third of Alex Salmond's "real" problems after Westminster ruled out a formal deal to share the pound and the European Commission president said it would be “difficult, if not impossible” for a separate Scotland to join the EU.

The Scottish Government’s White Paper on independence promised that workers’ state pension entitlements would be honoured and raised the prospect of having a lower retirement age than the UK.

But Mr Osborne’s decision to rule out a currency union has raised questions about this pledge, particularly in what currency Scots’ state pensions would be calculated and paid.

Mr Brown’s intervention came as a major survey of Scottish public opinion showed a majority of voters like the idea of handing more financial powers to Holyrood, including control over welfare.

However, support dropped sharply when it was pointed out this could mean them paying different rates of income tax or getting a different state pension than in England.

More than six out of ten Scots said they wanted the state pension to be paid from taxes collected across the UK as a whole, rather than Scotland only.

Similarly, more Scots (50 per cent) believed that North Sea oil revenues should be used to fund public services across the UK than have them spent north of the Border only (44 per cent).

Launching a campaign to “keep our British pensions", Mr Brown said: "They (the separatists) haven't answered the basic problem – you have paid into your pension, into the UK Exchequer all your lives, you've paid your national insurance, you've paid your taxes so that you have a right to a pension.

"You are expecting, quite rightly, that you will get a British pension – but if there is independence, the British pension stops, the national insurance fund that you're paying into is broken up.

"There will be a separate Scottish national insurance fund, and the rest of the UK will have the lion's share."

The former Chancellor said that when benefits such as pensioners' credit, the winter fuel allowance and free television licences are added to the state pension, Scots receive around £200 more on average each year than their English counterparts – amounting to £200 million in total per year.

Mr Brown argued that the SNP's estimates for oil revenues – which would help fund pensions under independence – were at odds with private documents leaked to the media.

"They didn't expect to get £6.9 billion from oil, they only expect to get £4 billion ... far from having all these billions of resources, the SNP are exaggerating all the time.

"That difference of over two million is the equivalent of half the amount of money spent on everybody's pension in Scotland.

"If that money is not there, how are pensions going to be afforded?"

He said the current system works thanks to the pooling of risks and resources across the United Kingdom.

"We pay our national insurance and we pay our taxes so that we can pay for our pensions later. We have more needs (in Scotland) and more pensioners, therefore we get more," Mr Brown said.

"The SNP know that they have got a problem ... the rising demand for pensions, set against the money that they have, means there is greater volatility in social security spending."

He said the current state pension is guaranteed by the UK National Insurance fund, but a separate Scotland would face a higher bill thanks to its more rapidly ageing population.

Gregg McClymont, Labour's pension spokesman, said: “Withdraw Scotland from the UK and Scots are withdrawn from the UK pensions system. The UK state pension would cease to exist in Scotland.

“The security and certainty of the UK's pension promise would disappear overnight for Scottish pensioners and for the rest of us who have been paying into the system.”

He said the only pledge OAPs would have about their pensions would be Mr Salmond’s and suggested this was worthless given the First Minister’s threat not to accept a share of the UK’s national debt.

But Nicola Sturgeon, the Deputy First Minister, “The last person anyone in Scotland will take lessons from when it comes to pensions is Gordon Brown – the man who destroyed final-salary pension schemes with his £100 billion raid, and insulted our older folk with a miserly 75p increase in the state pension.

“Mr Brown's track record means that he lacks all credibility on this subject, so it is little wonder that his speech bears little relationship with reality.” She said it was “grossly irresponsible” to suggest OAPs would not receive their pensions after separation.

The Scottish Government’s White Paper promised to pay state pensions “on time and in full” after independence, but did not stipulate how this would be administered or funded.

It also pledged to review the Coalition’s decision to increase the state retirement age to 67 between 2026 and 2028, stating this may not be necessary thanks to lower life expectancy in Scotland.

But the Institute of Chartered Accountants of Scotland (ICAS) recently published a report stating the document had failed to answer a series of key questions about pensions.

Despite the Nationalists’ claims to the contrary, the institute said funding the state pension in a separate Scotland would be "more of a challenge" because there would be fewer taxpayers for each OAP.

New data from the latest annual Scottish Social Attitudes Survey found that 32 per cent of voters said they would prefer ‘devo max’, the name given to the devolution of all powers to Holyrood except defence and foreign affairs.

This compared to 25 per cent backing for the status quo and 31 per cent for full independence. This was buttressed by figures showing 57 per cent want Holyrood to make decisions about welfare compared to 22 per cent who replied Westminster.

More Scots also wanted control over taxation to reside at the Scottish Parliament (57 per cent) than the Commons (22 per cent).

But 58 per cent agreed the basic state pension should “always be the same in Scotland as it is in England” and 52 per cent were opposed to having different income tax rates.

Professor John Curtice, research consultant at ScotCen Social Research, which conducted the study, said: “Acceptance of the likely consequences of devolving power and responsibility for taxation and welfare lags behind apparent support for the idea itself.”

He said forthcoming Tory and Labour plans to extend devolution if voters reject separation may prompt a debate that gives the public “a clearer view of its merits”.